UK financial services regulators have been accused of being soft on corporate crime.
It comes after the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) wrapped up their probe into the failure of banking group HBOS in 2008 by deciding to take no action against its former bosses.
Andy Hornby, who was chief executive at Bank of Scotland owner HBOS from 2006 until the group was bailed out by the UK Government in October 2008, and is remembered by many as one of the architects of the banking crisis, will face no sanctions.
In 2010 Mr Hornby’s then counterpart at Edinburgh-based Royal Bank of Scotland (RBS) Group – now NatWest – also got off scot-free at the end of a 17-month investigation.
The Financial Services Authority decided there were no grounds for enforcement action against Fred “The Shred” Goodwin and other senior bosses at RBS following its investigation into their role in the bank’s near-collapse in October 2008.
Mr Goodwin suffered a steep fall from grace – widely portrayed as the arch-villain of the UK banking crisis – and was even stripped of his 2004 knighthood amid the fall-out.
The joint PRA-FCA investigation into HBOS, now part of Lloyds Banking Group, started in 2016.
It looked at the performance of former senior managers at HBOS in the years before its failure.
The probe team also considered whether those people should be subject to a prohibition order, prohibiting them from performing certain roles in the financial services industry.
Bank of England and the FCA take no action against execs for excessive risk-taking & frauds at HBOS.
HBOS was bailed out.
Regulator sends green light to bankers to carry on ruining lives and hand the bill to the public.
UK is soft on corporate crime.https://t.co/WYU1sm7L4y
— Prem Sikka (@premnsikka) August 27, 2022
PRA and FCA investigators gathered more than 2 million documents.
They interviewed former HBOS senior managers, “engaged extensively with the parties” and undertook “substantial analysis of contemporaneous documentary evidence”.
Announcing on Friday their decision not to take enforcement action, without much by way of explanation, the Bank of England said the “rigorous and forensic” investigation was now closed.
Utterly shameful that @theFCA will take NO action against anyone after a 6-year probe into disgraced bosses of failed HBOS. Instead 'asleep at the wheel' Bailey is now Governor at the Bank of England!
What a sordid, corrupt, unjust country we live in!https://t.co/iL4UYlCqCd
— Gina Miller (@thatginamiller) August 27, 2022
The announcement sparked a furious backlash on social media, with Lord Sikka, a co-founder of the Tax Justice Network, saying the failure to act sends a “green light to bankers to carry on ruining lives”.
He added: “The UK is soft on corporate crime.”
Transparency campaigner Gina Miller, who in 2019 successfully challenged Prime Minister Boris Johnson’s move to prorogue parliament and stop MPs carrying out duties in the run-up to the Brexit deadline, said the decision was “utterly shameful”.
Former Wall Street trader Matt Connolly, who was found guilty but later acquitted on charges of being complicit in the manipulation of the Libor system, which was used to figure out how much banks should pay to borrow money from other lenders, called the FCA “toothless”.
Peter Bill, former property editor, journalist, columnist for the Evening Standard, said: “Ending the inquiry means that the only individual to face regulatory action is Peter Cummings, the former HBOS corporate banking chief, who was fined £500,000 in 2012.”
‘Brazen deck-clearing’
Mr Bill added it was “brazen deck-clearing by FCA during political interregnum”.
WhistleblowersUK, a not-for-profit organisation “supporting whistleblowers everywhere”, said it was a “complete insult” to all those affected by the banking crisis and “makes a mockery of the regulators”.
Conversation